It’s created and transfered by encryption protocols which both limit the amount of bitcoins that can be introduced into the market at any time and act as a verification mechanism to check previous transfers.
I'm just nitpicking here, but it seems like it might be a nit more accurate to say that "it is created and transferred (notice your spelling error) by a protocol that makes use of cryptographic algorithms to provide reliable proof of validity. This protocol both limits the amount of bitcoins that can be introduced into the market at any time and acts as a verification mechanism to check previous transfers.
Q) But if bitcoins are decentralized, and no one controls them, how more bitcoins enter the economy?
Q) But if bitcoins are decentralized, and no one controls them, how
do more bitcoins enter the economy?
A) That’s the interesting part: Because bitcoins are based on cryptographic encryption for the creation, new bitcoins can be created (or ‘mined’) from ‘blocks’ (the encryption releasing the next set of bitcoins). The most basic way to put it is new bitcoins are made by solving computer puzzles.
There is no encryption or decryption involved in mining at all. It is just hashing. Broadcasting a block that is acceptable to every peer using the protocol requires searching for a hash that has a low enough value to satisfy a target determined by the protocol. When such a hash is found, the protocol allows the individual (or group) that found the hash to award themselves a restricted amount of bitcoins. If the block they attempt to broadcast doesn't result in a low enough hash value, or the block awards too many bitcoins, then every peer running the protocol will simply refuse to acknowledge he block.
A) Well, that would be the case if the difficulty of the encryption algorithm remained static, but Satoshi thought a little further than that. He designed the encryption so that every time it was solved and new bitcoins entered the market, the next block would be much more difficult to mine;
This is not true. The difficulty can increase or decrease depending on the total amount of hash power currently available on the entire bitcoin network. There is no requirement that it increase. The difficulty only changes every 2016 blocks. It is the nature of the hashing algorithm and the data that the miner uses to build the block that makes every hash essentially random and requires miners to repeatedly hash the block header over and over with a slight change to the data on each attempt until they find a hash that has a low enough value.
Q) Ok, so I know how bitcoins enter the economy, how do they get transfered?
transferredQ) Ok, so I know a little about bitcoins now; how do I buy them?
A) The method will vary from exchange to exchange, but typically you’ll need to provide some sort of information, make a deposit to one of the exchanges and then purchase bitcoins. Depending on whether the exchange is real-time or fixed-rate, the cost of a bitcoin can vary. You can get started by taking a look at our real-time exchange list or our fixed-rate exchanges.
When you have U.S. dollars and you want Yen, do you "buy" Yen, or do you "sell" dollars? I suppose it depends on your native country. If you are Japanese and you have some Dollars, you probably sell them for Yen. If you are American and you have some Dollars, you probably use them to buy Yen. Perhaps it is less confusing to just say that you "exchange" one currency for the other. So, you don't "buy" bitcoins, you exchange your local currency for bitcoin currency.
Also note that exchanging currencies isn't the only way to acquire bitcoins. You could also provide a product or service and accept bitcoins as payment.
